* SSEC -1 pct, CSI300 -0.9 pct; HSI -0.5 pct
* Caution ahead of Fed interest rate decision
* U.S.-China trade talks to resume next week
HONG KONG, March 20 (Reuters) - Shares in mainland China and Hong Kong fell on Wednesday after a report suggested possible hurdles in Sino-U.S. trade talks, and as investors exercised caution ahead of a policy decision by the U.S. Federal Reserve which is expected to throw more light on its rate plans for the year. ** At the midday break, the Shanghai Composite index was down 1 percent at 3,059.17 points, and the blue-chip CSI300 index was down 0.9 percent. ** CSI300’s financial sector sub-index was lower by 0.2 percent, the consumer staples sector slid 1 percent, and healthcare shares lost 1.4 percent. ** The smaller Shenzhen index was down 1.7 percent and the start-up board ChiNext Composite index was weaker by 2.7 percent. ** The U.S. Federal Reserve is due to announce its interest rate decision later on Wednesday. ** The central bank will remain patient for a little longer than thought just last month, waiting until the third quarter before raising rates once more, and then stay on the sidelines, a Reuters poll of economists showed. ** But “there is the risk of a communication mistake... that the Fed accidentally sends the message that it is very worried about the US and global outlook, and that the next move is in fact a rate cut,” Thomas Costerg, a senior U.S. economist at Pictet Wealth Management, said in a note this week. ** U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to China next week for a new round of trade talks with Chinese Vice Premier Liu He, a White House official said on Tuesday. ** But Bloomberg reported on Tuesday that progress in the talks was slowing as Chinese officials have “stepped back” from some initial promises they made on improving intellectual property protections demanded by the United States. ** High-level officials have not met face-to-face since President Donald Trump delayed a March 1 deadline to raise tariffs on $200 billion worth of Chinese imports. ** Analysts at Galaxy Securities said the Shanghai index had faced pressure in previous sessions above 3,100 points as investors grew cautious. “In the short run, the A-share market may continue to stay volatile. (Investors) should pay attention to the strength of relevant policy (support),” they wrote in a note. ** Chinese local governments issued 171.7 billion yuan ($25.59 billion) in special bonds in February, up from 154.5 billion yuan in January, the finance ministry said, as Beijing looks to fast-track infrastructure projects to boost growth. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.5 percent, while Japan’s Nikkei index was close to flat. ** Chinese H-shares listed in Hong Kong fell 0.6 percent. The Hang Seng Index declined 0.5 percent to 29,313.75 points. ** The largest percentage losers on the Shanghai index were Xinjiang Xintai Natural Gas Co Ltd, down 8.9 percent, followed by Shenzhen Sunxing Light Alloys Materials Co Ltd, which fell 8.6 percent, and Suzhou Keda Technology Co Ltd, down by 8.4 percent.
Reporting by Noah Sin; Editing by Subhranshu Sahu